More on the Universal Basic Income

Posted
on December 26, 2013, 1:17 pm

An interview I did a few months back with Salon journalist Josh Eidelson on a Swiss proposal to provide all legal residents of the country with a (high) unconditional annual basic income (about $34,000 per year) gave me an opportunity to raise some of my concerns about the universal basic income (UBI) more generally and especially about UBI in the context of the United States.

The Salon interview touched on many issues beyond UBI and in the interview format I don’t think I made the sharpest case I could have. So, I wanted to excerpt here from a 2012 review I did for Dissent of Guy Standing’s excellent book, The Precariat. In one part of that review, I set out my main reservations about Standing’s primary policy response to the rise of precarious employment, which is some form of UBI:

Many social democrats fear that a fully developed basic income program would replace not just the existing collection of cash transfers available to the poor but would ultimately undermine the direct state provision of public services such as health care, child care, elder care, and so on.

This potential clash between basic income and the welfare state plays out along several dimensions. The most obvious is that the two approaches compete for the same finite resources. To provide 300 million people with a poverty-level basic income of $10,000 a year (roughly the poverty level for an individual living alone) would cost the United States three trillion dollars per year. This is about 20 percent of our current GDP or almost as much as total federal government spending. Even at a much more modest level of $5,000 per person per year, we would be spending substantially more on basic income than the federal government currently spends on Medicare and Medicaid combined. It is hard to imagine any political scenario that would allow expanding taxation sufficiently to cover these extra expenditures, so a basic income would certainly imply some cuts in existing spending.

Many social democrats fear that a basic income would also make a philosophical case for replacing (or in the case of the United States, pre-empting) social provision of services such as education, health care, child care, and elder care. It isn’t just that a basic income would compete for scarce resources, it would also lead the political Right to argue that once the cash transfers are made, the “free market” is the most efficient delivery mechanism for these services. The United States, where the Right has long supported various forms of vouchers and negative-income tax plans, seems particularly vulnerable to this potential “voucherization” of social welfare.

The clash also operates in the realm of electoral politics. The vast majority of beneficiaries of the existing social insurance system in the United States—the most important components of which are Social Security, Medicare, and unemployment insurance—already earn substantially more than any plausible basic income plan. Progressives pursuing a basic income would be asking their natural constituency—those whose main source of economic security are these three programs— to forgo attempts to defend and improve these programs, in favor of pushing to create an expensive new social program that provides what amounts to only the barest cash cushion for the broad working and middle class. (Not to mention that widespread voucherization would greatly undermine public-sector unions, one of the strongest remaining political supports for the existing U.S. safety net.)

You can read the whole review here (behind a paywall) at the Dissent site.